GOI/Tougher tax stance pays off

Indonesian tax revenue in August, excluding the oil and gas sector, jumped 40.5% from a year ago, as tougher action by the authorities led to improved compliance, Director General for Tax Darmin Nasution said, Reuters reported.

The government has taken a much tougher stance against individuals and companies over tax payments since 2006, when Nasution was appointed director general, in a bid to increase revenues.

Now it hopes to widen the tax net further, after parliament passed the government's long-awaited tax bill on September 3, introducing lower tax rates and providing incentives for Indonesians to register as taxpayers.

"Revenue increased because the tax office has been modernizing, implementing new methods," said Nasution at a meeting with reporters on Tuesday.

He said the tax office had set benchmarks for various sectors and used this to check whether companies' tax payments were sufficient.

In cases where corporate tax payments were well below the benchmark, or where individuals were not registering to pay tax, the tax office has stepped up its investigations, he said. "People would rather pay than be investigated," Nasution added.

For years, it was common practice to pay bribes to tax officers to avoid having to pay taxes or reduce the tax bill.

But Finance Minister Sri Mulyani Indrawati, a reformer who has vowed to clean up key government officers, has introduced changes in the tax and customs departments in a bid to raise state revenues and improve efficiency.

The finance ministry has set a tax revenue target of Rp609.2 trillion for 2008, or about 70% of the total budget revenue, and has forecast tax revenue will rise by 19% to Rp723.9 trillion in 2009.

Tax revenue in August, minus tax from oil and gas, climbed to Rp46.132 trillion, from Rp32.843 trillion in August last year. For the first eight months, tax revenue was Rp318.74 trillion, up 46% from Rp218.33 trillion a year ago.